IPC allows users permissionless creation of L2 subnets - anyone (e.g., a country adopting BTC, or a group of Bitcoiners) can create and manage L2 subnets on Bitcoin. These can be federated or Proof-of-Stake subnets, where stake is in Bitcoin, with dynamic validator membership.
Bitcoin is our ground truth - L2 subnet naming and cross-subnet communication is recorded on Bitcoin as L1 chain. All L2 validators run Bitcoin L1 full nodes, monitoring Bitcoin for IPC related information.
Subnets and their users can freely choose which other subnets to communicate with.
.svg)
BTC deposits, from Bitcoin as L1 to L2 subnets, and withdrawals, from an L2 to Bitcoin L1 , work much like centralized exchanges today, albeit our L2 subnets are decentralized.
Moreover, the IPC protocol supports Transfers, user-friendly SWIFT-like transactions among users of different L2 subnets with messaging and cross-subnet settlement on BTC L1. Subnets and their users can transfer value across L2 subnets seamlessly and easily without pre-reserving liquidity (as needed in, e.g., the Lightning Network).
To this end - our unique Transfer protocol, inspired by Ordinals and BRC-20 messaging, allows up to 9 times cheaper Txs (in terms of vB/tx) compared to using only Bitcoin L1.
While our protocol is subnet agnostic, we are currently building IPC on Bitcoin showcase leveraging Fendermint, which initiallyimplemented IPC on Filecoin. We port IPC smart-contracts to Bitcoin, while retaining Fendermint to power L2 subnets.
Fendermint uses CometBFT (ex Tendermint) BFT consensus with EVM and FVM (Filecoin VM) compatible smart contract execution engine, supporting arbitrary applications within subnets.